Stromal cell-derived factor 1 (SDF-1/CXCL12/PBSF) plays important roles in the biological and physiological functions of haematopoietic and mesenchymal stem cells. This chemokine regulates the formation of multiple organ systems during embryogenesis. However, its roles in skeletal development remain unclear. Here we investigated the roles of SDF-1 in chondrocyte differentiation. We demonstrated that SDF-1 protein was expressed at pre-hypertrophic and hypertrophic chondrocytes in the newly formed endochondral callus of rib fracture as well as in the growth plate of normal mouse tibia by immunohistochemical analysis. Using SDF-1(-/-) mouse embryo, we histologically showed that the total length of the whole humeri of SDF-1(-/-) mice was significantly shorter than that of wild-type mice, which was contributed mainly by shorter hypertrophic and calcified zones in SDF-1(-/-) mice. Actin cytoskeleton of hypertrophic chondrocytes in SDF-1(-/-) mouse humeri showed less F-actin and rounder shape than that of wild-type mice. Primary chondrocytes from SDF-1(-/-) mice showed the enhanced formation of philopodia and loss of F-actin. The administration of SDF-1 to primary chondrocytes of wild-type mice and SDF-1(-/-) mice promoted the formation of actin stress fibers. Organ culture of embryonic metatarsals from SDF-1(-/-) mice showed the growth delay, which was recovered by an exogenous administration of SDF-1. mRNA expression of type X collagen in metatarsals and in primary chondrocytes of SDF-1(-/-) mouse embryo was down-regulated while the administration of SDF-1 to metatarsals recovered. These data suggests that SDF-1 regulates the actin organization and stimulates bone growth by mediating chondrocyte hypertrophy.